A deductible, such as Rs 500, requires the policyholder to bear the initial cost before the insurance coverage activates. For instance, with a repair cost of Rs. 2,000, the policyholder pays the first Rs 500, and the insurance company covers the remaining Rs 1,500. Opting for a higher deductible reduces premiums, while a lower one increases them.
The premium is the sum paid by the policyholder to the insurance company for coverage. Various factors, including driving history, age, location, and vehicle type, influence insurance premiums. Understanding premiums is crucial, as they directly impact insurance costs.
3. Liability Coverage:
Mandatory by law, liability coverage safeguards policyholders from financial responsibility in accidents they cause. It covers damages or injuries inflicted by the policyholder in an accident, including physical injury liability and property damage liability. Bodily injury liability addresses medical expenses, pain and suffering, and lost wages, while property damage liability caters to repairs for damaged property.
4. Comprehensive Coverage:
While this is optional, comprehensive coverage may be obligatory for financed or leased vehicles. It protects against non-collision damages, including theft, vandalism, fire, natural disasters, and animal collisions. Comprehensive coverage shields policyholders from damages unrelated to collisions.
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5. Collision Coverage:
Again an optional component in vehicle insurance, collision coverage is recommended for newer or valuable vehicles, as it addresses serious damages resulting from accidents. This coverage pertains to the portion of the policy covering a damaged vehicle in a collision, irrespective of fault.